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Executive Summaries Dec 4, 2019

Trademarks Trolls: A Real Threat to Canadian Brand Owners?

A recent practice has come to Canadian trademark owners’ attention: The apparition of trademark trolls.

Trademark trolls, or trademark squatters, are companies applying for trademarks without using or intending to use them, with the sole objective of using these applications to try to request money to allow others to register and use any of their trademarks. This was highly unusual in Canada, but it is unfortunately getting more and more common and Canada has now been hit hard.

Trademark trolls usually file applications for marks comprising common words, names or brands that have not been registered yet. These applications commonly list many goods and services in each of the 45 classes recognized under the Nice Classification system. The applied-for marks are therefore very likely to be considered confusing with many applications and registrations for trademarks sharing a common element with them.

Consequently, trademark trolls may pose serious problems to legitimate businesses that wish to register their marks and see their applications objected to on the basis that they are confusing with trademark trolls’ previously filed applications and registrations. Trolls also make enforcement of legitimate trademarks more troublesome since their presence on the trademarks register might dilute the apparent distinctiveness of such trademarks, hence reducing their scope of protection, or even precluding the owners to prove that they are the true owner.

Canadian Trolls Landscape

This practice gained popularity in 2017, when Canada announced that the use requirement to obtain a registration would disappear. Prior to the amendments, applicants who were not using a mark at the time of filing an application had to declare that they were using the mark prior to obtaining a registration.

Whereas only some trademarks have been applied for in association with all 45 classes before 2017, more than 650 have been filed since then. More than 400 of those applications are in the name of a single company, which certainly has been generally recognized as a trademark troll by the Canadian Intellectual Property community since it does not seem to have any commercial activities.

An application for a mark in association with so many goods and services certainly looks suspicious as very few legitimate trademark owners can claim a bona fide intent to use their mark so broadly. None of these applications has been approved yet. However, in the absence of clear policies from the Canadian Intellectual Property Office on this matter, some of these marks might and should be approved, leaving it to legitimate brand owners to initiate opposition proceedings against the applications, which can turn out costly.

On a positive note, with the amendments to the Trademarks Act that came into force last July 17, we are expecting to see less trademark trolls applications, since applicants now need to pay a filling fee of $330 for the first class plus a fee of $100 for each additional class to which the application relates, making it costly to file an application in all 45 classes (i.e. $4,730). Prior to the amendments, the filing fee was $250 for any amount of goods and services and so the application process was then significantly cheaper for trademark trolls. It is also of note that the Trademarks Act now specifically includes “bad faith” as a ground for opposition.

Avoiding Risks

In order to avoid being the victim of a trademark troll, it is important that Canadians and foreign companies ensure the protection of all their valuable trademarks in Canada by duly renewing existing registrations and filing new applications for their unregistered marks.

Brand owners who have already been targeted by a trademark troll should monitor closely the troll’s relevant application and initiate opposition proceedings in due time. Prior to filing opposition proceedings, and in order to try to avoid them and their related costs, we suggest notifying the Canadian Intellectual Property Office with a “Notification of third party rights” in order to notify the Examiner assigned to the application of the existence of your prior trademark application or registration.

In addition, in order to reduce the risk that trademark trolls represent, we recommend subscribing to a watch service of your most valuable trademark in order to be notified of the presence of a trademark application similar to the watched trademark.

Our trademark protection strategy team can help you identify the issues you may face and identify your priorities in terms of trademark use and registration as well as in terms of third-party trademark monitoring, while taking into account your business plan in Canada and abroad. Don't wait any longer... For the protection of your trademarks in Canada, the saying "better safe than sorry" has never been truer.

For further information, please contact our Trademarks team who will be pleased to assist you with your trademark needs in Canada.

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